Insider: Retail chief spots a bargain
8th July 2016 13:16
by Lee Wild from interactive investor
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Debenhams
Sir Ian Cheshire clearly thought Brits would vote to stay in the European Union. The chairman at bravely snapped up 50,000 shares in the department store chain on the day we went to the polls. That trade went badly wrong.
Bought at 69.5p on 23 June, the day after a 15-week trading update, Debenhams'share price sank to just 51.25p this Wednesday, down 26% and the lowest in almost five years. But it had already begun to fall following the latest figures.
Under-pressure chief executive Michael Sharp, who had already handed in his notice, reported a 0.2% decline in like-for-like sales in the 15 weeks to 11 June. At constant currency they were down further, at minus 1.6%. Full-year gross margin forecasts were also downgraded to flat from previous guidance for between flat and up 0.5%.
"With continuing tight control of operating costs and good cash generation against a more uncertain trading background, the group currently anticipates that FY 2016 profit before tax will be within the range of market forecasts," said Sharp, who left the company on 24 June.
New CEO Sergio Bucher, European fashion chief, takes over in October. Until then Cheshire's in charge, and he's taken advantage of the fall in share price to build his stake again.
Sir Ian, senior independent director Terry Duddy and non-executive director Stephen Ingham spent a total of £150,000 on Debenhams stock this week. The chairman bought 100,000 at 54.2p, Duddy got 100,000 at 53.35p, and Ingham 74,557 at 53.25p.
Up at 57p currently, this looks like a good buy. Retailers are having one hell of a tough time right now though. If this trio want to hold onto those quick profits Bucher had better deliver.
Quality at a great price
Brexit has wiped billions from companies with a domestic focus, but others have been caught in the crossfire. Here's a quick round-up of first-class businesses suffering a temporary dip in popularity.
has been a firm favourite at Interactive Investor for years, and we've backed the shares throughout its amazing rally. However, its share price has collapsed from 1,330p pre-Brexit to just 1,025p.
That was too low for executive chairman Peter Cowgill, who bought 15,000 shares in the tracksuits and trainers retailer for 1,156p on 24 June. His finance director has just followed his lead, snapping up 5,000 at 1,092p.
Automotive consultant is one of Britain's great companies. It's a first class technical consultancy which builds engines for McLaren supercars. But its share price, above 860p in May, dived to 645p in the aftermath of Brexit.
Admittedly, profits at the performance products division will be lower in the second half due to lower one-off software license sales and fewer transmission sales, but chairman Sir Terry Morgan was quick to pick up 5,000 shares at 698p.
Following a strong set of full-year results this week, boss Ewan Lloyd-Baker has just bought 32,395 in the Luton-based pumps and motors manufacturer at 79p each.
There was help from last October's £10.1 million Peter Brotherhood acquisition, which is already winning new orders. Group underlying profit before tax jumped 18% to £5.1 million in the year to March on revenue up 27% at £61.6 million.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.